LEVERAGE AND THE FINANCIAL SYSTEM RICK TOBIN
n investor who primarily uses third (3rd) party money from sources such as banks, investment banks,
private money groups, margin loans, credit lines, or other sources can be both a positive or negative
option, depending upon the current state of the economy. In “Boom” economic times, when assets
are rapidly appreciating in value, leverage can be an exceptional financial and investment strategy.
This is partly true since the owner gets to keep all of the profits as we have seen more over the past
year as it relates to rapidly increasing stock and real estate prices, even though the 3rd money source
typically puts up the bulk of the capital in order to purchase the asset.